Fuelling controversy

Late one Wednesday afternoon earlier this year, journalists covering the European Union received by email what appeared to be a fairly standard press release from the European Investment Bank, the financing arm of the EU.

“The EIB will exclude all future coal finance as part of its new energy policy,” the press release proclaimed. Several news outlets relayed the announcement, explaining that the investments in coal had been frozen to align the EIB’s lending with the EU’s climate change objectives.

But the press release was a hoax, perpetrated by environmentalists who wanted to put pressure on the lender to divest from coal. The EIB put out a statement denying the release. The next day, a press conference announcing the bank’s annual results was interrupted by an environmental activist, presenting the bankers with a fake award purporting to recognise their green behaviour in divesting from coal.

Undoubtedly the EIB is under pressure to stop using EU funds to finance coal power projects. The environmentalists say such investment runs contrary to EU climate goals, and in any event coal, which is undergoing a revival in Europe, does not need such help.

When the EIB finally unveiled its draft investment strategy last month, it insisted it was indeed phasing out investment in coal. It published on 24 June new plans for assessment criteria for energy projects that would screen out further lending to unabated coal and lignite power-plants, setting an ‘emission performance standard’ of 550g of carbon dioxide per kilowatt hour of power generated. This standard is calculated from the emission reductions required by the EU’s emissions trading scheme.

However, the benchmark would still allow financing of some coal plants, including high-efficiency coal-fired combined heat and power plants, plants with carbon capture and storage, and coal stations that also burn biomass. Exceptions to the standard are permissible for projects that help security of supply in isolated systems, and to address overused plants.

Green worries

These exceptions have left environmental campaigners unimpressed. “Not only does the bank plan to continue investing in fossil fuel, including coal, it is also actively encouraging the development of unconventional fossil fuels,” says Anna Roggenbuck, of Bankwatch, a financing watchdog.

“The proposed draft would allow the EIB to finance new coal units in Rybnik in Poland or the Stanari lignite plant in Bosnia and Herzegovina and potentially other similar projects around the Balkans. This is absolutely not the type of projects the bank of the European Union should be endorsing if it is to further the EU’s long term climate objectives.”

Security of supply

However, others have warned that completely divesting from coal could threaten the EU’s security of supply and stifle innovation in new technologies such as carbon capture and storage (CCS), which takes emissions from power plants and stores them underground (see page 20).

Euracoal, an industry association, wrote to the EIB ahead of the strategy’s publication, “Given the rapid global growth in coal use,the EU must promote the cleaner, more efficient and ultimately emission -free use of coal.” It went on: “In too manypolicy documents, at member state and EU level, the assumption is made that coal use will fade away. In this way, policymakers are ignoring the global picture and are even ignoring the reality that coal use in the EU has grown significantly over recent years, mainly because all the alternatives are so much more expensive.”

The EIB’s draft investment plan has to be approved by its board of directors later this month (23 July).

Ahead of that meeting, activists are continuing to exert pressure on the bank for it to change its policy.